Where are we to find solutions to economic and energy challenges?

17 january 2014

Chief Adviser to Director General of the Analytical Center Leonid Grigoriev participated in the Gaidar forum, one of the major international scientific events in the field of economics held in Russia annually.

On the 15th of January Leonid Grigoriev took part in an expert
discussion entitled “Institutional opportunities and barriers for energy market
development” during which he spoke about challenges inside the existing energy
system. In his opinion, three trends are to be taken into account when
institutional architecture of the energy sector is being reformed, namely: the
growing role of new consumers (China and India in particular), the growing role
of state “players” as well as the struggle against climate change. Mr.
Grigoriev indicated the following risks among those of the existing energy
system: macroeconomic destabilization (that is the crisis and high petrol
prices), lack of investment and increasing competition for energy resources
involving developing countries.

“Humanity cannot find easy solutions to energy challenges as such solutions
purely and simply do not exist,” – believes Mr. Grigoriev. According to him,
The IEA forecasting may well be a good source of information for executives but
it is by no means a corpus of ready-made general solutions. “It has nothing to
do with coordination, whereas it is exactly coordination that we will need to
reduce massive expenditures and fulfill our priorities,” – he thinks. Among the
challenges of the energy sector Mr. Grigoriev also indicated political disputes
and uncertainty both of which lead to excessive investing into some projects
and insufficient investing into a multitude of others. Besides, investments
amounting to a mere 1,5% of the global GDP throughout several decades are
simply not enough to solve a whole range of global energy issues.

Leonid Grigoriev shared his impressions from the participation in the forum
in the “RBK-TV” studio where experts discussed, among others, possibilities of
pursuing Gaidar’s economic policy. According to Grigoriev, it is technically
impossible to continue Gaidar’s liberal policy “due to absence of any
appropriate conditions”. Mr. Grigoriev believes that Russia had great trouble
getting out of the 1998 financial crisis and since 2003 favourable situation at
the oil market has boosted consumption. “From the 2000s until the outbreak of
the crisis our economy received huge amounts of money that were then
successfully squandered away. This is how our country was recuperating after a
tough transition”, - believes Mr. Grigoriev.

During this time not a single development institute was created in Russia,
which is exactly what landed the country into the crisis, according to Mr.
Grigoriev. “Now we are getting out of that recession little by little”, - the
expert believes. For instance, Russia’s GDP is roughly 10% more than it was in
1989 and personal consumption is superior to the one we had in Soviet times. As
for the investments, we are lagging behind the Soviet era despite certain
improvement. According to Mr. Grigoriev, over the last two years flat dynamics
of public spending development can be traced. “While personal consumption is
increasing, its development is mostly explained by import growth and rent
income. In other words, net export is going down,” - Mr. Grigoriev
concluded.

The Gaidar forum has been held since 2010. In 2014 it was dedicated to
the issue of sustainable development. The forum’s participants discussed such
issues as: economic growth in the context of global changes, its potential and
possibilities of efficient management, risks related to innovative
enterprenership, new industrialization, contradictions of resource-based
economies and ambiguous modernization consequences for the society’s economic
and socio-political development.